Board to consider final joint-account rule

(Feb. 12, 2021) A final rule on what records can be used to support the insured status of a joint ownership share account is slated for action during an open meeting to be held virtually Thursday (Feb. 18) by the NCUA Board.

Also on the agenda for the meeting, which gets underway at 10 a.m. ET (and which will be live streamed via the Internet): a quarterly report on the National Credit Union Share Insurance Fund (NCUSIF) and a briefing for the board on the Consolidated Appropriations Act, 2021, and the Emergency Capital Investment Program (ECIP) created under that statute.

The proposal on joint ownership share accounts, issued by the board last May, would allow account records information other than a signature card support the insured status of a joint ownership share account in a credit union. The aim of the proposal – which mirrors a rule adopted in 2019 by the FDIC Board – is aimed at facilitating prompt payment of share insurance in the event of a federally insured credit union’s failure “by explicitly providing alternative methods that the NCUA could use to determine the owners of joint accounts, consistent with the NCUA’s statutory authority,” the proposed rule summary stated.

NASCUS, in its comment supporting the proposal, wrote that providing federally insured credit unions flexibility in satisfying the signature card requirement with information in joint account records acknowledges that account opening practices have evolved substantially over the last nearly 50 years. NASCUS agreed with the proposal’s overall approach – and offered a modest change: replacing the phrase “such as” with “including, but not limited to.” Doing so, NASCUS wrote, would allow NCUA to “make clear on the face of the regulation that other evidence in the account records may be sufficient to establish qualifying joint ownership of a share account.”

The insurance fund report slated for next week is expected to show the fund’s equity ratio as of Dec. 31, 2020. Last September, the agency reported a 13-basis-points (bp) decline in the ratio to 1.22% during the six months ending June 30. That ratio was 16 bp lower than the fund’s “normal operating level” (target level) of 1.38% and within 2 bp of the level (1.2%) below which the agency would be required to deploy a restoration plan.

The drop in the ratio in the first half of last year was attributed to rapid share growth amid the COVID-19 pandemic. Agency staff said during the September open board meeting that the fund equity ratio was expected to rise to 1.32% by year-end 2020, following credit unions’ adjustments in their 1% NCUSIF capitalization deposit.

NCUA Board Feb. 18 open meeting agenda